South Korean coal prices dip but cold limits downside
The South Korean coal market retreated this week, moving in tandem with regional coal prices, and responding to market intervention in China, the largest importer of seaborne coal. But an early cold snap across northeast Asia and a stronger power demand outlook limited the downside in South Korea.
China's main economic planning agency the NDRC announced a plan to regulate thermal coal prices, in an effort to cool domestic prices that are at historic highs amid tight availability. This weighed on global coal prices this week.
Argus assessed NAR 5,800 kcal/kg coal at $185.83/t fob Newcastle and $223.74/t cfr South Korea this week, down by $22.98/t and $4.90/t on the week, respectively.
The delivered price fell less sharply as demand remains firm in South Korea amid an early winter cold spell, while increasing exposure to spiralling spot LNG prices prompted the government to roll back autumn coal-fired capacity restrictions last week. The temperature in South Korea's capital Seoul dropped to as low as 1.3°C on 17 October, a 64-year low for the time of year, according to data published by the Korea Meteorological Administration (KMA).
And the early cold boosted power demand in South Korea this week, with average daily peak power demand increasing by 130MW on the week to 69.7GW over 18-21 October. This was up by 4.4GW on the year and around 5.8GW above the 2016-19 pre-pandemic average for the same period (see chart).
Based on up-to-date daily peak power demand and 17.6GW of scheduled nuclear availability in October, South Korea's power demand could grow by more than 7.5pc on the year this month, which could boost thermal generation by more than 10.5pc on the year, according to Argus analysis.
The latest plant maintenance schedule published by Korea Power Exchange shows South Korea's state-owned coal-fired availability will average 21.3GW this week, compared with a previous expectation of 21.5GW, based on last week's schedule. The downward revision is the result of additional maintenance being added, although no plants are scheduled to go off line for voluntary restriction purposes.
The KMA projects a 50pc chance of lower than usual temperatures during 1-7 November and a 40pc chance for 8-28 November, according to the latest one-month weather outlook published on 21 October.
Meanwhile, state-owned Korea Midland Power (Komipo) is scheduled to close a tender on 25 October seeking 520,000t of minimum NAR 5,000 kcal/kg for loadings in 2022. Independent power producer GSDEP also plans to procure up to 240,000t of minimum NAR 5,300 kcal/kg coal for loading next year, in a tender closing on 27 October.
Weak coal demand outlook to persist in Japan
Weakness in regional coal prices also weighed on implied landed coal prices for Japan this week, while there was more thermal power capacity added this week amid colder weather across northeast Asia.
Daily power demand in Japan fell by 7pc on the week to 90.6GW over the 18-20 October period, although this was still up by 5pc compared with the same period a year earlier. Japanese power demand has trended higher on the year since mid-September amid early cold weather, although it largely remained within the pre-pandemic range (see chart).
Temperatures in Japan were forecast to remain below the seasonal average for most days during the next fortnight by as much as 5.01°C, according to Speedwell weather data.
Cooler weather year-on-year encouraged the country to add around 2.7GW more thermal generation capacity for the 18-24 October period on the week, but coal-fired availability increased by only 30MW as recent strength in spot coal prices continued to erode the fuel's competitive advantage over utilities' oil-linked LNG term supply.
Japan planned to add 2.3GW more gas and 200MW more oil-fired capacity during the same period, respectively, according to the latest plant operational status notice issued by the Japan Electric Power Exchange.
Coal-fired margins halved this week as a result of the fall in Japanese wholesale power prices and strong coal prices. Theoretical profits from a 44pc-efficient coal-fired power unit averaged ¥1,480/MWh over 15-21 October, down by 54pc from a week earlier, based on the day-ahead system price from the Japan Electric Power Exchange and Argus' NAR 6,000 kcal/kg fob Newcastle spot coal and freight assessments.
Longer term, a 4.4GW year-on-year rise in nuclear availability to 7.8GW during October-March could also weigh on thermal generation and have a greater impact on coal than gas, given current coal-to-gas fuel switch economics.
Meanwhile, LNG stocks at Japan's main power utilities stood at a five-year high for the time of year of 2.3mn t as of 15 October, although they were around 200,000t below the level at the end of September, according to data published by the trade and industry ministry Meti. The ministry expects the country should be able to prevent any power shortage this winter, as long as power demand grows within an expected range and utilities continue to import LNG as planned.
Related news posts
Vietnam’s 1H 2024 coal imports hit all-time high
Vietnam’s 1H 2024 coal imports hit all-time high
Singapore, 22 July (Argus) — Vietnam's coal imports reached an all-time high in the first half of this year despite an on-year drop in seaborne receipts in June from a relatively high base last year. A growth in seaborne receipts led by strong utility demand took Vietnam's coal imports to 33.43mn t in January-June, up from 24.1mn t in the same period last year, according to customs data. Vietnamese customs data do not differentiate between coking and thermal coal. The imports in the first half of this year hit the highest level since Vietnam imported 30.61mn t in January-June 2020, according to Argus' analysis of the customs data. Imports were at 6.36mn t in June, down from a revised 7.21mn t a year earlier and 6.5mn t in May . This was the first year-on-year drop in imports since January last year. Vietnam's strong imports in the first half of the year comes amid heatwaves in the region, which has boosted power consumption and coal-burn at utilities. Vietnam is leading the growth in imports in the southeast Asian region, a trend that is helping to partly offset a lukewarm demand trend in China — the biggest coal importer in the world. Vietnam could end up importing over 66mn t of coal this year at the current average rate of 5.57mn t/month, according to Argus calculations. This could be the country's highest annual imports since the 55mn t of coal it received in 2020, and up from 51.16mn t in 2023. The on-year dip in imports in June came from a high base a year earlier when strong demand from utilities took the monthly imports to a record high. The dip also came as the coal-fired generation dropped to 12.37TWh in June from 17.08TWh in May this year, while the hydro-power generation more than doubled to 9.55TWh last month on a month-on-month basis, according to Argus calculations based on the data from state-owned utility EVN. The country's coal-fired generation, which accounted for 57pc of overall generation in January-June, could come under pressure on a steady uptick in hydropower output, owing to heavy rains in some parts of the country. Overall generation rose by about 12pc on the year to 151.7TWH in the first half of the year, while coal-fired generation reached 86.34TWh, up from 66.76TWh a year earlier, EVN data show. Hydropower generation was at 28.63TWh during the period, down from 29.83TWh a year earlier, according to the EVN data. Vietnam's northern regions may face heavy rains until 24 July as typhoon Prapiroon heads towards Vietnam after making a landfall in south China's Hainan, according to the country's National Centre for Hydrometeorological Forecasting. Coal-fired generation rose to cater for higher electricity consumption resulting from continued economic recovery and an uptick in air-conditioning demand. Power demand continues to grow, and the peak capacity of the national power system reached 49.53GW on 19 June, up from 45.53GW a year earlier, it said. Peak capacity might increase further to over 52GW this month, it added. Authorities have directed EVN and state-owned coal producers to ensure stable supplies to meet the increased power consumption. The uptick in power consumption and coal demand during the first six months and during the second quarter of the year was also supported by an increase in economic activity. Vietnam's GDP grew by 6.93pc in April-June from a year earlier. The increase in receipts of seaborne coal also followed softness in international coal prices, especially for coal from Vietnam's preferred origins — Indonesia and Australia. Argus assessed Indonesian GAR 4,200 kcal/kg coal at $52.38/t fob Kalimantan on 19 July, with the price of the grade recovering from a 10-month low of $52.07/t on 12 July. Argus assessed the Australian NAR 5,500 kcal/kg coal market at $87.61/t fob Newcastle on 19 July, down from $96.59/t fob Newcastle on 1 March — the highest value for the grade in the year to date. Power saving EVN has advised local authorities, businesses, commercial and residential consumers to ensure economical and efficient use of electricity. It has asked commercial units and households to reduce consumption, and advised them to not set air-conditioner temperatures below 26-27°C. Vietnamese authorities have asked power consumers to pay special attention to electricity usage during peak hours between 11:00am to 3:00pm local time (04:00-08:00 GMT) and 7:00pm to 11:00pm. By Saurabh Chaturvedi Vietnam's coal imports (mn t) Vietnam's Jan-June generation mix (TWh) Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
South32 misses Australian coking coal output target
South32 misses Australian coking coal output target
Sydney, 22 July (Argus) — Australian-South African diversified resources company South32 was 2pc off its coking coal production target of 4.4mn t at its Australian Illawarra coal operations in the 2023-24 fiscal year to 30 June. The firm is on track to complete the sale of its Illawarra operations in New South Wales (NSW) state by the end of September, marking its exit from coal as it focuses on its non-ferrous metal portfolio. It completed three and started a fourth longwall move at the Appin and Dendrobium mines, leaving new owner Golden Energy and Resources and M Resources with a lower maintenance burden into 2025. South32's total coal production was down by 24pc in 2023-24 compared with the previous year, largely because of maintenance. The firm increased production in the fourth quarter and final half of 2023-24 after a weak first half but the quarter was still down by 15pc on April-June 2023. South32 expects its costs for 2023-24 to be around $150/t, which is in line with its guidance, which was raised from $140/t in February. It received an average price for its Illawarra coal of $275/t for its metallurgical coal and $113/t for its thermal coal for January-June compared with $276/t and $101/t respectively in July-December 2023. The firm's operating margins at its Illawarra metallurgical coal operations were $17/t on thermal coal and $152/t on metallurgical coal in 2022-23 when its operating costs were $127/t. It will release its 2023-24 results on 29 August. Argus last assessed the premium hard coking coal price at $229/t fob Australia on 19 July, down from $334.50/t on 19 January and close to the $235.50/t on 19 July 2023. It assessed the high-grade 6,000 kcal/kg NAR thermal coal price at $134.87/t fob Newcastle on 19 July, up from $128.09/t on 19 January and down from $129.18/t on 19 January 2023. South32 last year dropped plans for a $700mn expansion at Dendrobium, following a dispute with NSW's water agency over its potential impact on water quality . Dendrobium, which supplies coking coal to the Whyalla steelworks in South Australia and exports from NSW's Port Kembla coal terminal, is expected to close in 2028. By Jo Clarke South32 Illawarra Coal output (mn t) Apr-Jun '24 Jan-Mar '24 Apr-Jun '23 2023-24 2022-23 2023-24 guidance Met coal production 1.27 1.24 1.50 4.31 5.50 4.40 Met coal sales 1.36 1.05 1.53 4.17 5.40 Thermal coal production 0.21 0.16 0.25 0.63 1.02 0.60 Thermal coal sales 0.18 0.19 0.17 0.70 0.96 Total production 1.49 1.41 1.75 4.94 6.52 5.50 Source: South32 Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Trump vows to target 'green' spending, EV rules
Trump vows to target 'green' spending, EV rules
Washington, 19 July (Argus) — Former president Donald Trump promised to redirect US green energy spending to other projects, throw out electric vehicle (EV) rules and increase drilling, in a speech Thursday night formally accepting the Republican presidential nomination. Trump's acceptance speech, delivered at the Republican National Convention, offered the clearest hints yet at his potential plans for dismantling the Inflation Reduction Act and the 2021 bipartisan infrastructure law. Without explicitly naming the two laws, Trump said he would claw back unspent funds for the "Green New Scam," a shorthand he has used in the past to criticize spending on wind, solar, EVs, energy infrastructure and climate resilience. "All of the trillions of dollars that are sitting there not yet spent, we will redirect that money for important projects like roads, bridges, dams, and we will not allow it to be spent on the meaningless Green New Scam ideas," Trump said during the final night of the convention in Milwaukee, Wisconsin. Trump and his campaign have yet to clearly detail their plans for the two laws, which collectively provide hundreds of billions of dollars worth of federal tax credits and direct spending for renewable energy, EVs, clean hydrogen, carbon capture, sustainable aviation fuel, biofuels, nuclear and advanced manufacturing. Repealing those programs outright could be politically difficult because a majority of spending from the two laws have flowed to districts represented by Republican lawmakers. The speech was Trump's first public remarks since he was grazed by a bullet in an assassination attempt on 13 July. Trump used the shooting to call for the country to unite, but he repeatedly slipped back into the divisive rhetoric of his campaign and his grievances against President Joe Biden, who he claimed was the worst president in US history. Trump vowed to "end the electric vehicle mandate" on the first day of his administration, in an apparent reference to tailpipe rules that are expected to result in about 54pc of new cars and trucks sales being battery-only EVs by model year 2032. Trump also said that unless automakers put their manufacturing facilities in the US, he would put tariffs of 100-200pc on imported vehicles. To tackle inflation, Trump said he would bring down interest rates, which are controlled by the US Federal Reserve, an agency that historically acts independently from the White House. Trump also said he would bring down prices for energy through a policy of "drill, baby, drill" and cutting regulations. Trump also vowed to pursue tax cuts, tariffs and the "largest deportation in history," all of which independent economists say would add to inflation. The Republican convention unfolded as Biden, who is isolating after testing positive for Covid-19, faces a growing chorus of top Democratic lawmakers pressuring him to drop out of the presidential race. Democrats plan to select their presidential nominee during an early virtual roll-call vote or at the Democratic National Convention on 19-22 August. By Chris Knigh t Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Australia’s Whitehaven hits 2023-24 coal guidance
Australia’s Whitehaven hits 2023-24 coal guidance
Sydney, 19 July (Argus) — Australian coal producer Whitehaven met its production guidance for its New South Wales (NSW) mines in the 2023-24 fiscal year to 30 June, with managed run-of-mine (ROM) output from its newly acquired Queensland mines also meeting their guidance. Saleable coal production at Whitehaven's NSW-based assets totalled 16.7mn t for 2023-24, up by 6pc on the 15.7mn t recorded last fiscal year and within its guidance for 2023-24 of 16mn-17.5mn t. Saleable output from NSW for April-June was 4.3mn t, 11pc higher than January-March's 3.87mn t and above the year earlier figure of 3.83mn t. Saleable production from Queensland totalled 4mn t, Whitehaven's first quarter since acquiring Australian-Japanese joint venture BHP Mitsubishi Alliance's 12mn t/yr Blackwater and 4mn t/yr Daunia coking and thermal coal mines on 2 April. Queensland coal sales of 3.2mn t for the quarter reflected slippage into July-September because of now resolved, transition-related rail constraints from Daunia, Whitehaven said. A selldown of around 20pc of Blackwater to global steel producers is progressing, the firm reported, without providing further details. The first production and sales have been achieved at the 10mn t/yr Vickery mine , while operations ceased during April at the 2.5mn t/yr ROM capacity Werris Creek mine. Whitehaven's overall unaudited unit cost guidance, excluding royalties, for NSW in 2023-24 was A$114/t ($76/t), above the guidance range of A$103-113/t because of lower production at Narrabri and underlying inflation. Capital expenditure was A$380mn, below the 2023-24 guidance of A$400-480mn. The Argus high-grade 6,000 kcal/kg NAR price averaged $133.46/t fob Newcastle and the 5,500 kcal/kg NAR coal price $88.47/t during April-June compared with $126.74/t and $93.85/t respectively for January-March. Whitehaven's full-year results will be published on 22 August. By Tom Major Whitehaven results Apr-Jun '24 Jan-Mar '24 Apr-Jun '23 Volumes (mn t) Managed coal production 8.3 3.9 3.8 Managed coal sales 7.3 3.8 3.9 Managed coal stocks 2.7 1.0 1.5 Coal sales revenue mix (%) Metallurgical coal 59 13 5 Thermal coal 41 87 95 Prices achieved ($/t) NSW average 137 136 177 Queensland average 180 Source: Whitehaven Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more